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Financial Institutions Urged to Ensure Strong Governance in Outsourcing Arrangements

The Central Bank of Solomon Islands (CBSI) has issued new guidelines for financial institutions (FIs) engaging in outsourcing arrangements to promote good governance and ensure the stability of the financial system.

Key Requirements

• Establish contractual agreements with service providers, including:
  • Service level agreements (SLAs)
  • Confidentiality provisions
  • Security measures
• Conduct due diligence on service providers by assessing:
  • Reputation
  • Financial ability
  • Technical ability
  • Capacity to deliver required services
• Ensure Business Continuity Plan outlines procedures for dealing with unexpected events or failures by service providers
• Monitor and control outsourcing arrangements through regular reporting to:
  • Board
  • Proxy Board
  • Senior management
• Notify CBSI of any changes or issues related to outsourcing arrangements

Penalties for Non-Compliance

Failure to comply with the guidelines may result in:

• A monetary penalty
• Corrective measures, including issuance of an order to cease and desist from unsound and unsafe practices

The guidelines aim to promote good governance and ensure the stability of the financial system by ensuring that FIs manage their outsourcing arrangements effectively. They come into effect on December 1, 2017.

By following these guidelines, FIs can ensure strong governance in their outsourcing arrangements and maintain a stable financial system.